General Motors to pay $1 million to resolve SEC accounting case tied to ignition switch

Reuters Staff

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NEW YORK (Reuters) - General Motors Co has agreed to pay $1 million to resolve a U.S. Securities and Exchange Commission accounting case related to a faulty ignition switch linked to 124 deaths and 275 injuries, the regulator said on Wednesday.

The deal would resolve charges that accounting control failures at the automaker prevented GM from properly assessing the potential financial impact of the defective ignition switch, which led to vehicle recalls beginning in 2014, the SEC said.

The largest U.S. automaker said in a statement it consented to an administrative SEC order, without admitting or denying any wrongdoing. “The SEC settlement does not call into question any of GM’s current or prior financial statements or its disclosures,” GM said.

The SEC said GM’s internal investigation involving the defective ignition switch was not brought to the attention of its accountants until November 2013 even though other GM personnel understood in the spring of 2012 that a safety issue was at hand.

“Internal accounting controls at General Motors failed to consider relevant accounting guidance when it came to considering disclosure of potential vehicle recalls,” said Andrew M. Calamari, director of the SEC’s New York Regional Office, said in the statement.

Automakers must assess the likelihood of “whether the potential recall will occur, and provide an estimate of the associated loss or range of loss or otherwise provide a statement that such an estimate cannot be made,” the SEC said.

GM incurred ignition switch-related costs of more than $2 billion and set aside billions more for other recalls in 2014 and 2015.

In 2015, GM paid $900 million to settle a U.S. Justice Department criminal investigation. It also set aside nearly $1.1 billion to settle lawsuits from investors and owners and pay injury and death claims stemming from the ignition switch recalls.

The fine is a fraction of the $152.4 billion in net revenue GM reported in 2015.

Reporting by Nate Raymond in New York and David Shepardson in Washington; Editing by Richard Chang